Exclusive: Nintendo gives EA ‘cost of production plus a dollar’ as others wait
Royalties adjusted as Nintendo fights for market.
We can reveal that in a deal brokered last month, Nintendo offered Electronic Arts a fresh royalty break of the cost of game production, plus $1 US, resulting in the slew of titles announced by Electronic Arts during March.
The deal, which was completed March 5, followed Electronic Arts threatening to immediately cancel all their GameCube projects, as the cost of bringing them to market was too great and the risk too high.
We were in discussions with Nintendo about this story last month, though nothing was confirmed by them. However, George Harrison, Nintendo’s senior vice president, marketing and corporate communications said last night, “The biggest games of the year last year were games like GTA and they came from an independent publisher. We need to make sure that we have good relationships with all the independent publishers, because you never know where the next big hit game is going to come from.”
The ‘cost of production plus a dollar’ figure has been Electronic Art’s mantra since it fell out with Sega over cartridge production over a decade ago. Many industry watchers see the insistence on this royalty price-point as one of the key factors in the firm sitting atop the third-party publisher tree.
Indeed, the EA deal, or one within 10% of it, is expected to be rolled out to all third parties in the coming weeks. However, don’t be under the impression that this move was inspired by anything other than absolute necessity. We can exclusively reveal that Infogrames, Activision, Sega and Vivendi, amongst others, had stated their intention to withdraw from Cube support, in what would have been a killer blow to the console.
Nintendo is also expected to announce a similar move for Game Boy Advance royalty pricing, which insiders lead us to believe will be heavily influenced by the success of Pokemon in the US and Europe. There will also be royalty breaks for any games supporting link-up features between the GBA and the GameCube.
Expect more news on these matters from E3.
The deal, which was completed March 5, followed Electronic Arts threatening to immediately cancel all their GameCube projects, as the cost of bringing them to market was too great and the risk too high.
We were in discussions with Nintendo about this story last month, though nothing was confirmed by them. However, George Harrison, Nintendo’s senior vice president, marketing and corporate communications said last night, “The biggest games of the year last year were games like GTA and they came from an independent publisher. We need to make sure that we have good relationships with all the independent publishers, because you never know where the next big hit game is going to come from.”
The ‘cost of production plus a dollar’ figure has been Electronic Art’s mantra since it fell out with Sega over cartridge production over a decade ago. Many industry watchers see the insistence on this royalty price-point as one of the key factors in the firm sitting atop the third-party publisher tree.
Indeed, the EA deal, or one within 10% of it, is expected to be rolled out to all third parties in the coming weeks. However, don’t be under the impression that this move was inspired by anything other than absolute necessity. We can exclusively reveal that Infogrames, Activision, Sega and Vivendi, amongst others, had stated their intention to withdraw from Cube support, in what would have been a killer blow to the console.
Nintendo is also expected to announce a similar move for Game Boy Advance royalty pricing, which insiders lead us to believe will be heavily influenced by the success of Pokemon in the US and Europe. There will also be royalty breaks for any games supporting link-up features between the GBA and the GameCube.
Expect more news on these matters from E3.
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